Avery Dennison Corporation (NYSE:AVY) has successfully closed the issuance of €500 million in senior notes, according to an 8-K filing with the Securities and Exchange Commission. The notes, bearing an interest rate of 3.750%, are set to mature on November 4, 2034, with the first interest payment due on November 4, 2025.
The proceeds from the offering, which netted approximately €495 million after underwriting discounts and estimated offering expenses, are earmarked to repay the company's 1.250% senior notes due in March 2025. The remaining funds will be utilized for general corporate purposes.
This financial move, executed under an indenture with The Bank of New York Mellon (NYSE:BK) Trust Company, N.A. as Trustee, allows Avery Dennison to redeem the notes in whole or in part before maturity. The redemption price will be the greater of the principal amount or a specified "make-whole" sum, except if redemption occurs on or after August 4, 2034, when it will equal the principal amount plus accrued interest.
In case of a change of control triggering event, Avery Dennison would be required to offer to repurchase the notes at 101% of the principal amount, plus accrued interest.
The notes rank equally with the company's other unsecured and unsubordinated indebtedness, senior to any future subordinated debt, and are structurally subordinated to liabilities of the company's subsidiaries.
In other recent news, Avery Dennison Corporation reported a 9% year-over-year increase in adjusted earnings per share for the third quarter, reaching $2.33. The company also raised its full-year earnings guidance to between $9.35 and $9.50 per share, despite a challenging macroeconomic environment. Avery Dennison is expecting organic sales growth between 4.5% and 5%.
Citi reduced its price target on Avery Dennison shares from $240 to $228, maintaining a Neutral rating. This decision follows a pattern of lowered sales growth outlooks for Avery Dennison's Industrial Labels segment. BMO Capital Markets also adjusted its outlook on Avery Dennison, reducing its price target to $247 from $252, but maintaining an Outperform rating.
Avery Dennison is expanding its Radio-Frequency Identification (RFID) technology into the food category, piloting this technology in approximately 2,800 Kroger (NYSE:KR) bakeries. The company's restructuring actions are expected to save over $55 million.
InvestingPro Insights
Avery Dennison's recent €500 million senior notes issuance aligns with its strong financial position and strategic debt management. According to InvestingPro data, the company boasts a market capitalization of $16.49 billion and has demonstrated solid financial performance with a revenue of $8.68 billion over the last twelve months as of Q3 2024.
InvestingPro Tips highlight Avery Dennison's commitment to shareholder returns, noting that the company has raised its dividend for 14 consecutive years and maintained dividend payments for an impressive 54 consecutive years. This consistent dividend policy underscores the company's financial stability and aligns with its proactive approach to debt management as seen in the recent notes issuance.
The company's profitability is further emphasized by its positive earnings outlook, with analysts predicting profitability for the current year. This financial health supports Avery Dennison's ability to manage its debt effectively, including the strategic use of the new notes to repay existing obligations and fund general corporate purposes.
For investors seeking more comprehensive analysis, InvestingPro offers 6 additional tips that could provide deeper insights into Avery Dennison's financial outlook and market position.
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